Keeping your accounting and financial records clean and organised may seem like a daunting task, but if you know how to do it properly, it need not take up too much of your time. You just need to know what to focus on and how to focus on it. With a little bit of effort, you can tidy up your records – which results in a more efficiently-run enterprise as well.
Assess your VAT transactions
If you are VAT-registered, it may not always be easy to know exactly how much you can charge to clients – and how much you can actually claim back. But your VAT charges to clients will depend on the type of products or services your business sells. What you can do, however, is review the list provided by HMRC to see whether an item or product should be zero-, standard-, or reduced rated. Checking HMRC’s guide will also help you determine whether an item is outside the VAT scope or exempt altogether. You can also re-claim VAT from your suppliers, but only a certain amount.
Track how you pay for expenses
Paying for your business’ expenses is a necessary endeavour, but you also have to be organised in how you are doing it. Are you doing it through the business’ bank account, from the business’ credit card, or from your own personal finances? These should all be separately tracked and recorded so you can easily check how you pay for your costs. It’s important to record all of this because you would want to keep your personal expenses and business expenses separate. When the time comes for your business to pay you back for your personal expenses, how much should you get? The point is to keep all the costing well-organised so you know where everything comes from.
Make sure your costs are properly categorised
When you are listing down your individual expenses, make sure they are categorised properly. If you purchase stocks, for instance, then they should be listed down as inventory or stocks. If you spend for rent or salary, these should be properly categorised as well. As the central London accountants from GSM & Co will confirm, this will also make it easier and quicker for your accountant to move an expense to a separate category when it comes to tax reporting. Review all your past transactions and make it a point to have them consistently categorised.
Review your bank’s services and fees
Whilst cleaning and organising your records, it might also be a good time to consider the actual service – and benefits – you are receiving from your bank. How much are their charges for your account/s, and their fees for extra services such as payments of foreign currency or payments by cheque? If you find another bank that has lower fees, it might be a good idea to make a switch.